Due to reduced inflation pressure, the Reserve Bank of India (RBI) may reduce the repo rate by 0.25 percent in its upcoming monetary policy meeting. If the regulatory bank announces a cut in the repo rate, it will directly benefit the common man. The EMI of the loan will reduce and the chances of getting the loan at a cheaper rate will also increase. Retail inflation based on the Consumer Price Index has been less than the lower limit of the government’s target of 2 percent for the last two months.
Some experts say that due to the boom in the economy, RBI will not reduce interest rates. This momentum has been strengthened by reforms like reduction in government expenditure, government investment in the right places and reduction in GST rates. The meeting of the Monetary Policy Committee will be held from 3-5 December 2025. RBI Governor Sanjay Malhotra will announce the decision on December 5. The central bank started reducing rates in February last year and reduced the repo rate by a total of one percent to 5.5 percent. The cuts were stopped in August. According to some experts, due to reduced inflation pressure, RBI may cut the main interest rate by 0.25 percent in the upcoming meeting.
Interest rate may reduce
According to a report by HDFC Bank, this year the economic growth has been higher than expected and inflation has been lower than expected. The report says that therefore there will be a very close contest in the upcoming decision. There are some risks to growth in the second half and inflation is expected to remain well below 4 percent till the third quarter of the financial year 2026-27, so we think that there could be another cut of 0.25 percent in this meeting. The report of the Economic Research Department of State Bank of India states that with strong GDP growth and very low inflation, now RBI has to clearly tell the interest rate direction to the market in the MPC meeting to be held this week.
Madan Sabnavis, Chief Economist of Bank of Baroda, said that there will be a very close competition regarding the repo rate in the upcoming policy. Since monetary policy is made keeping in mind the future and right now the interest rate seems to be at the right level. He said that in such a situation we do not think that there should be any change in the interest rate. CRISIL Chief Economist Dharamkirti Joshi said that the repo rate may be cut by 0.25 percent in December. Economic growth is still strong, but a sharp decline in retail inflation in October has created more room for cuts.
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